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Dubai Property Market - Prices Have Fallen According to Colliers



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By : David Garner    99 or more times read
Cityscape Dubai, the world's biggest B-2-B property investment and development expo in the world, opened today amid rumblings that the Dubai property market has seen price falls of 16% in the second quarter of 2008.

The Dubai property market has been enjoying some years of strong capital growth, and the realization that prices have now fallen in some areas has come as a shock to some industry experts.

The announcement came from Colliers, one of the biggest players in world real estate, and indications are that the six year property boom in Dubai is coming to an end with the company's predictions that the Dubai property market will remain flat for at least a 12 month period possibly up until 2010.

Ian Albert, a regional director at Colliers International said in the report; 'In the first quarter, the average price went up by 43% while in the second quarter they came down by 16%.' The drop has been attributed to trends of a seasonal nature and a possible confidence issue in the buyers market related to the credit crunch.

The main threat to the price of housing in Dubai is liquidity in the financial markets. A cash shortage has already doubled the interbank rate to post 4% in the last quarter. Many mortgage lenders have restricted loan to values on home loans to 70%, and the rate for a standard mortgage has increased to around 8%.

Albert added 'Future performance will be hinged on liquidity. Everyone in Dubai is now looking for the magic figure on how much prices will fall, but because of what's going on in the US and Europe, we won't know where we are in terms of liquidity for at least another two to three months. Prices have so far mainly appreciated through speculation,'

He summarized that demand would remain strong despite mortgage loans being harder to come by, with investors into the Dubai property market moving back to basic fundamentals such as good location, and good quality developments, and moving away from raw off-plan speculation.

For my own opinion, I have not invested in the Dubai property market personally as I feel I missed the boat and therefore the lion's share of the profits. This news should be seen as an opportunity to investigate the property market potential of other markets. I personally will be taking a very close look at the Ajman property market over the next few weeks.


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